TL;DR Breakdown
- Crypto market now significantly stronger than before
- Reasons behind market resilience
A senior strategist from JPMorgan Chase & Co bank, after he compared last week’s crypto market crash and the 2018 market crash, he explained that the state of the market now is significantly more resilient and robust than three years ago.
This is despite the substantial decline in price experienced in today’s market compared to three years ago.
The most recent violent crash experienced in the crypto market resulted from Elon Musk’s action and China’s negative stance on crypto. Their actions led to what can be described as the most violent correction in the market in terms of USD declines.
Days after, BTC plunged from $50,000 to a low of $30,000, and most altcoins nosedived even more. The crash went on further after over-leveraged traders started to liquidate their positions.
Analyst Josh Younger Cited by Bloomberg, outlined the similarities of this crypto market dump and what transpired in early 2018, which actually turned out to be the start of a year-long bear market.
Nevertheless, Younger outlined a few significant differences as well, including the market volatility, which primarily came from North American this time.
Reasons why crypto market has become more resilient
More notably, Younger stated that the cryptocurrency space had reacted quite well to the 50 percent dumps with fast recoveries across all charts.
“We continue to see evidence of resilient microstructure in cryptocurrency markets: the volatility spike appears somewhat regionally localized, market depth is down but has not cratered despite these moves, and derivatives pricing has managed to adjust quickly enough to retain a decent fraction of the leveraged long base.”
However, the JP Morgan Chase analyst argued: “against the view that we are in the midst self-reinforcing vicious cycle of price declines a classic run scenario.”
The crypto community has asserted many times that the 2020/2021 bull run is quite different from the cycle three years ago. The market is more mature now, and the entrance of institutions, banks, and large corporations proves this narrative.
